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### Composite Wood Products Regulation Advisory: 10-01

EXTENSION OF SELL-THROUGH DATE FOR DISTRIBUTORS, FA BRICATORS, AND

RETAILERS OF PRE-PHASE 1 FINISHED GOODS

The California Air Resources Board (ARB) is delayin g the enforcement of the sell-through date that applies to distributors, fabricators, and retailers of finished goods made with pre-Phase 1 composite wood product panels. The extension is through Dece mber 31, 2011, and affects businesses which use composite wood product panels (i.e., fabricator s) to make finished goods, such as furniture, cabinets, picture frames, etc., as well as business es that distribute or sell these goods at the retai l level. The extended sell-through period will not c hange the anticipated emission reduction benefits, because ARB had expected that these pre-Phase 1 fin ished goods would have already been sold if the economy and turnover of inventories had not slo wed. The purpose of this extension is to address excess inventories within California of finished go ods made with pre-Phase 1 composite wood product panels. These excess inventories are a res ult of the economic recession, which has led to slow sales across many business sectors.

Definitions

• “Pre-Phase 1 composite wood product panels” means composite wood product panels manufactured before January 1, 2009, that do not co mply with the Phase 1 emission standards specified in ARB’s Airborne Toxic Control Measure T o Reduce Formaldehyde Emissions From Composite Wood Products (the “Regulation”).

• “Pre-Phase 1 finished goods” means finished goods made from pre-Phase 1 composite wood product panels.

• “Extension,” “delay in enforcement,” and “enforcem ent grace period” mean that ARB will not enforce the sell-through dates for finished goods m ade with pre-Phase 1 panels until after December 31, 2011. During this enforcement grace p eriod, ARB regulatory staff will not refer pre-Phase 1 finished goods for penalties or take ot her enforcement action against distributors, fabricators, and retailers regarding the affected s ell-through dates.

Background

Businesses required to comply with the Regulation a re: manufacturers, distributors, importers, fabricators, and retailers of composite wood produc t panels and finished goods that contain regulated products. The Regulation establishes a phased-in a pproach to formaldehyde emission standards with the most stringent standards going into effect between January 2010 and July 2012.

To comply with the Regulation, panels must meet the formaldehyde emission standards specified in the Regulation and must have been produced by a manufacturer that has been certified by an ARB-approved third party certifier. Similarly, pan els used to make finished goods must also have been certified as complying with the emission stand ards.

The Regulation has provisions that allow businesses a limited time to sell or use non-compliant composite wood products if those products were manu factured before the effective date of each 

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Ju ly 20 10Page 2 of 2 emission standard. This is referred to as the sell -through period. Allowing businesses time to sell or use existing inventories provides a smoother transi tion to each new emission standard. If a composite wood product was manufactured after an ap plicable effective date, the product must meet the applicable emission standard.

Why is ARB extending the sell-through period for pr e-Phase 1 finished goods?

ARB recognizes that many California businesses that sell and supply finished goods containing composite wood products have been and continue to b e adversely affected by the recession. Therefore, the ARB is providing an additional year, until December 31, 2011, for distributors, fabricators, and retailers to deplete their existin g inventories of pre-Phase 1 finished goods.

In November 2009, the ARB issued Regulatory Advisor y 09-04, which extended through December 31, 2010, the sell-through dates that appl y to: 1) distributors and retailers of pre-Phase 1 composite wood product panels; 2) distributors, imp orters, fabricators, and retailers of finished good s made with pre-Phase 1 composite wood product panels ; and 3) distributors of Phase 1 compliant hardwood plywood with veneer core (HWPW-VC). Since November 2009, staff has monitored the sell-through and found that the sale of many finish ed goods are still slow due to the recession and more time is needed to draw down remaining inventor ies of pre-Phase 1 finished goods.

No extensions have been provided to manufacturers o f composite wood product panels. All particleboard (PB), medium density fiberboard (MDF) , hardwood plywood with composite core (HWPW-CC), and thin MDF currently being manufacture d for California must be Phase 1 compliant. Many PB and MDF manufacturers are already certified as meeting the Phase 2 standards. Likewise, all HWPW-VC being manufactured for California must be Phase 2 compliant. Manufacturers currently have the capacity to produce ample quanti ties of certified panels to meet both Phase 1 and

Phase 2 demand.

What other issues should distributors, fabricators, and retailers be aware of?

The delay in enforcement is intended to allow distr ibutors, fabricators, and retailers more time to deplete their existing inventories of pre-Phase 1 f inished goods that exist within California. Allowi ng the continued foreign importation into California o f pre-Phase 1 finished goods would simply add to the existing inventories and make the problem worse . Therefore, the delay in enforcement does not apply to the foreign importation into California of pre-Phase 1 finished goods for sale in California.

What is the extended sell-through date?

As mentioned, ARB previously announced a delay unti l December 31, 2010, in the enforcement of the sell-through dates for distributors, importers, fabricators, and retailers of pre-Phase 1 finished goods. With this Regulatory Advisory, this date is extended until December 31, 2011, for distributors

, fabricators, and retailers. For importers, the enf orcement delay for pre-Phase 1 finished goods will expire on December 31, 2010.

For more information

The Regulation may be viewed at: http://www.arb.ca.gov/toxics/compwood/compwood.htm

. Appendix 1 of section 93120.12 of the Regulation se ts forth the sell-through provisions. Additional information about complying with the Regulation, in cluding staff contacts, fact sheets and Frequently Asked Questions, are available on this w ebsite.